Chapter 6

A Big Battle for the Chinese Market

A big battle for the Chinese market is starting.

In 2009, China became not only the world’s top exporter, but also the second-largest importer. It is the number one market for an increasing amount of both capital and consumer goods. For instance, its share of the world market of optical fibers has hit 50 percent, and machine tools 30 percent (Shintaku 2010). In 2009, its portion of the world’s imports of integrated circuits (IC) and electronic components reached 33 percent (WTO 2010). It is the largest market for cars and brand fashion goods and is about to become the number one for luxury goods. The list can be continued.

Yet, the competition for tapping this market is becoming increasingly fierce, and more often than not Western companies appear to be not on the winning side.

China-Bound Exports of Capital Goods: East Asia Is Leading

In the capital goods sector, the leading exporters to China are not American or European firms, but their East Asian, especially Japanese, South Korean, and Taiwanese competitors. Between 2000 and 2008, exports of final capital goods from East Asia (Japan, South Korea, Taiwan, and the ASEAN states) to China increased 6.2 times and reached $88,277 million against respectively 2.3 times and $16,990 million for the United States and 4.0 times and $39,014 million for the EU-15.

In the exports of parts and components the gaps are even more striking. Within the same period, East Asia increased its exports ...

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